China's national real estate prosperity index in June reached 101.65 points, 0.18 points lower than the previous month and 3.31 points down year-on-year, the National Bureau of Statistics (NBS) said on Monday.

The index, which is released monthly, is compiled from statistics collected from 35 big and medium-sized cities, and calculated using eight indicators including the following sub-indices: property construction land area, vacant commercial land area, capital source, land development area, and commercial property.

The 100 mark is the dividing point. Above is good, below not so good. 

The index, which had been registering a dip for the last six months, has now fallen to its lowest point since 2004.

The property construction floor area sub-index in June rose 0.27 point to 103.17 points. In the first half of the year, 1.163 billion square meters of property construction was completed, up 18.8 percent from the same period last year. About 0.91 billion square meters of that was residential.

The vacant commercial floor area sub-index dipped by 0.33 points to 103.56 points. By the end of June, about 104 million square meters of space were left vacant, 7.9 percent higher than the year before. Out of the 104 million square meters, 59 million square meters were residential.

Housing developers received about 946.5 billion yuan (US$116.7 billion) in investments in the first half of 2005, up 23.2 percent from the previous year. This caused the capital source sub-index to rise by 0.72 points to 100.80 points.

But, in the past six months, investment in affordable housing projects was only 20.4 billion yuan (US$2.5 billion), down 14.6 percent over the same period last year.

The land development area sub-index rose slightly to 95.07 points, up 1.9 points. Over 81.9 million square meters of land were developed in the first half of the year, up 3 percent from the previous year.

Despite the government's introduction of macro-control measures -- including increasing interest rates on loans and imposing a 5 percent capital gains tax on sellers in certain instances -- property prices in China remain high. The commercial housing price sub-index in June was 104.49 points, 2.62 points lower than the previous month. The average price of commercial properties nationwide rose 10.1 percent in the first half of the year. Prices for residential properties rose 11.9 percent.

Chen Jijun, an analyst with CITIC Securities, attributes the high property prices to robust demand. But Chen added that it was normal for prices and fixed-asset investments to fall following the government's harsh measures.

The effects of the macro-control measures, which were adopted in April and May 2005, will take some time to show. Any impact should be reflected in statistical results in the later part of the year, the NBS said.

Zhao Xiao, a researcher with the state-owned Assets Supervision and Administration Commission (SASAC), is of a different view. Zhao said that the government's efforts have already begun to pay off.

(China.org.cn by Tang Fuchun July 27, 2005)